Ontario Tech U Budget: From projected deficit, cutbacks, and layoffs to 2.5-million-dollar surplus – where do we go from here?
On December 2nd, 2020, Ontario Tech U’s Board of Governors will meet to discuss Ontario Tech’s current budget situation including the 2.5-million-dollar surplus and the administration’s recommendation to the Board to allow President Steven Murphy to spend this surplus on strategic initiatives. Please click here for the report and motion that will be presented at the meeting. This recommendation was approved as a motion by the Audit and Finance Committee in their most recent meeting. The administration did not provide any information on what could be considered a “strategic initiative” and mentioned briefly that they hope to focus on student recruitment and retention but shared no further plans on those matters either.
This surplus was a result of drastic cuts that included layoffs, increased class sizes, reduced class choice, reduced TA support and increased workload for faculty and staff with no compensation. Since it is clear that this surplus was generated on the backs of faculty, staff and students, it is essential that the Senior Administration commit to investing this surplus into the resources needed to ensure the success and wellbeing of its students, staff and faculty.
The UOITFA believes that the University should use this surplus to recommit to its core mission of education and research. It is only through continued investment in our core mission, will we be able address any further concerns regarding the budget or enrolment. Investing in our core mission will work to strengthen our growing reputation which is central to the recruitment and retention of students, staff, world class researchers and educators and industry partners.
On June 25th the Board of Governors approved the budget, as presented by the administration, which projected a deficit based on a 10% reduction in student enrolment. A link to that early projected budget can be found here. The following day the administration held a townhall meeting hosting a panel comprising many of the senior leadership team.
Many good questions were posed to the panel, including one by the Faculty Association President, Mike Eklund, who posed a question in three parts:
With the new building under construction estimated at $50M, and knowing that $19M of this is coming from tuition and operating grants set aside over the past few years from the surpluses Andy (Interim CFO) just mentioned, a plan to borrow $25M (the USU is contributing $5M), and only $1M planned to be fundraised, how is this justified during this time of crisis?
Is there a business plan where this building somehow gets us more applicants and revenue?
And in the current budget year an additional $5.8M is being released from our restricted funds for the building and only $1.3M to reduce the budget deficit, how is that justified in the face of layoffs and reductions in student services?
President Murphy addressed the first part of this question only, noting that the fundraising objective is “way North of $1M”, and that it was “not a case of either/or.” He opened the questions up to the rest of the panel, who did not add to President Murphy’s response.
At the time, the concern was that the administration had been taking multiple millions of dollars out of operating funds over the past few years and setting them aside for the new building, and now, with a projected $1.3M needed to cover the operating budget deficit, they were choosing to layoff permanent staff and ask for wage freezes. Meanwhile, they were willing to borrow $25M to ensure the new building will be completed on time and planning for it to be over budget.
Faculty, staff, and students have felt the impact of these decisions through the temporary layoffs of some staff, permanent layoffs of other staff, loss of sessional instructors and teaching assistants, reduced course options for students, larger class sizes for some, lack of increased TA support despite the increased workload of many including nearly all faculty, all while enduring the social, emotional, economic, and (for some of us) physical effects of the COVID-19 pandemic.
What has changed since COVID-19?
Before COVID-19 was declared a pandemic, the Association reported in our March 6th budget update, that the administration was already planning for an estimated enrollment reduction in new students of 10%, which turned out to be 11.6% as of the June 2nd Ontario Universities Application Centre (OUAC) application deadline report. They had also planned and budgeted for a reduction in the number of returning students. These factors were projected to result in an estimated $3M budget shortfall. As the Association reported then, the administration was struggling to balance the budget forecasting a $6M deficit.
However, by April’s Audit and Finance Committee meeting this 10% reduction in enrolment was projected to have a much larger impact on the budget and finalizing the budget was put off until the June meetings so that further budget cuts could be enacted. At the time, the university presented a difficult financial situation for the year, compounded by projected effects of COVID-19 creating an atmosphere of uncertainty. It is noteworthy, when looking at past enrollment numbers that this decline was evident before the pandemic.
The University’s Previous Responses to Budget Cuts
Budget cuts are not new to Ontario Tech. The administration has been using them effectively in the past few years to not only “balance” the budget but (whether intentionally or not) to generate large surpluses at the end of the fiscal year. When this happens, the administration invariably recommends moving large portions of those additional surpluses into an Internally Restricted Fund in order to save for new building construction. In the last few years, there has been a change in fiscal strategy to now also move a relatively small portion of surplus funding into student scholarships and/or bursaries
During this pandemic year, funding was given to complete the new building currently under construction. As noted above in the question to President Murphy, budget documents support that there is a shortfall of $25M on that building as there has been no significant donation, or provincial or federal grants that have been secured for it. These restricted building funds could be redirected by the Board should it choose to do so, with the simple approval of a motion.
The Administration’s Budgetary Response
In the April and June Board meetings, a decision was made to call out to the financial units, presumably the Faculties and administrative departments, to plan and implement a 10% reduction in funding for the current year. This resulted in a reduction of expenses at the university level, which was still projected to result in a revenue model of a $2M deficit.
The Faculty Association was then approached to accept a “wage freeze” by foregoing the salary increases. The Association requested actual financial information to support their budget deficit projections and was not provided any supporting documentation. It was clear, in discussions, that any wage freeze accepted by the Association would not be restored in the future. Staff were also subject to temporary and permanent layoffs, and course options were restricted to students to provide a leaner model during the pandemic.
The administration had also been reluctant to disclose student enrolment numbers since those early deficit projections based on a 10% student decline in enrolment. Last week, they did disclose those numbers to the Audit and Finance Committee, as they are needed for future planning. The university noted that there has actually been an increase of 13% in enrolment from their budget assumptions (and a 3.6% increase over last years) and are now projecting a surplus. The Association will be monitoring the budget situation throughout the remainder of the year and will continue to update our members.